UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 9, 2018 |
FS Investment Corporation
(Exact name of Registrant as specified in its charter)
Maryland (State or other jurisdiction of incorporation) |
814-00757 (Commission File Number) |
26-1630040 (I.R.S. Employer Identification No.) |
201 Rouse Boulevard Philadelphia, Pennsylvania (Address of principal executive offices) |
19112 (Zip Code) |
| Registrant’s telephone number, including area code: (215) 495-1150 |
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On August 9, 2018, FS Investment Corporation (the “Company”) issued a press release (the “Press Release”) providing an overview of its operating results for the quarter ended June 30, 2018.
A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On August 9, 2018, in the Press Release, the Company announced a regular cash distribution of $0.19 per share, which will be paid on or about October 2, 2018 to stockholders of record as of the close of business on September 19, 2018.
The Company will make available under the “Presentations and Reports” page within the “Investor Relations” section of the Company’s website (www.fsinvestmentcorp.com) a presentation providing an overview of the Company’s operating results for the quarter ended June 30, 2018 in advance of its previously announced August 10, 2018 conference call.
Forward-Looking Statements
This Current Report on Form 8-K may contain certain forward-looking statements, including statements with regard to future events or the future performance or operation of the Company. Words such as “believes,” “expects,” “projects” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism or natural disasters, future changes in laws or regulations and conditions in the Company’s operating area, and the price at which shares of common stock may trade on the New York Stock Exchange. Some of these factors are enumerated in the filings the Company makes with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
EXHIBIT NUMBER |
DESCRIPTION |
99.1 |
Press Release, dated August 9, 2018. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FS Investment Corporation | ||||
| Date: | August 9, 2018 | By: | /s/ Stephen S. Sypherd | |
| Stephen S. Sypherd | ||||
| General Counsel | ||||
EXHIBIT INDEX
EXHIBIT NUMBER |
DESCRIPTION |
|
|
Exhibit 99.1
FSIC Reports Second Quarter 2018 Financial Results and
Declares Regular Distribution for Third Quarter
PHILADELPHIA, PA, August 9, 2018 – FS Investment Corporation (NYSE: FSIC), a publicly traded business development company focused on providing customized credit solutions to private middle market U.S. companies, announced its operating results for the quarter ended June 30, 2018, and that its board of directors has declared its third quarter 2018 regular distribution.
Financial Highlights for the Quarter Ended June 30, 20181
| • | Net investment income of $0.19 per share, compared to $0.19 per share for the quarter ended June 30, 2017 |
| • | Adjusted net investment income of $0.19 per share, compared to $0.19 per share for the quarter ended June 30, 20172 |
| • | Total net realized gain of $0.13 per share and total net change in unrealized depreciation of $0.44 per share, compared to a total net realized loss of $0.06 per share and a total net change in unrealized depreciation of $0.05 per share for the quarter ended June 30, 2017 |
| • | Paid cash distributions to stockholders totaling $0.19 per share3 |
| • | Total purchases of $240.4 million versus $350.3 million of sales and repayments |
| • | Net asset value of $8.87 per share, compared to $9.16 per share as of March 31, 2018 |
“We are pleased with the progress we’ve made since announcing the formation of the partnership between FS Investments and KKR,” said Michael Forman, Chairman and Chief Executive Officer of FSIC. “Completing the merger with Corporate Capital Trust, efficiently leveraging our new, lower cost revolving credit facility and maintaining a strong origination pipeline will position us well to deliver consistent long-term performance and drive value for our investors.”
Declaration of Regular Distribution for Third Quarter 2018
FSIC’s board of directors has declared a regular cash distribution for the third quarter of $0.19 per share, which will be paid on or about October 2, 2018 to stockholders of record as of the close of business on September 19, 2018.
| 1 |
Exhibit 99.1
Summary Consolidated Results
| Three Months Ended | ||||||||||||
| (dollars
in thousands, except per share data) (all per share amounts are basic and diluted)1 | June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||
| Total investment income | $ | 95,575 | $ | 101,018 | $ | 98,695 | ||||||
| Net investment income | 45,955 | 50,547 | 46,460 | |||||||||
| Net increase (decrease) in net assets resulting from operations | (31,338 | ) | 12,925 | 18,442 | ||||||||
| Net investment income per share | $ | 0.19 | $ | 0.21 | $ | 0.19 | ||||||
| Adjusted net investment income per share2 | $ | 0.19 | $ | 0.21 | $ | 0.19 | ||||||
| Total net realized and unrealized gain (loss) per share | $ | (0.32 | ) | $ | (0.15 | ) | $ | (0.11 | ) | |||
| Net increase (decrease) in net assets resulting from operations (Earnings per Share) | $ | (0.13 | ) | $ | 0.05 | $ | 0.08 | |||||
| Stockholder distributions per share3 | $ | 0.19000 | $ | 0.19000 | $ | 0.22275 | ||||||
| Net asset value per share at period end | $ | 8.87 | $ | 9.16 | $ | 9.30 | ||||||
| Weighted average shares outstanding | 242,801,446 | 245,713,188 | 245,107,405 | |||||||||
| Shares outstanding, end of period | 240,602,753 | 245,587,856 | 245,153,010 | |||||||||
| (dollar amounts in thousands) | As
of June 30, 2018 | As
of December 31, 2017 | ||||||
| Total fair value of investments | $ | 3,626,901 | $ | 3,926,234 | ||||
| Total assets | 3,882,958 | 4,104,275 | ||||||
| Total stockholders’ equity | 2,134,778 | 2,284,723 | ||||||
Portfolio Highlights as of June 30, 2018
| • | Total fair value of investments was $3.6 billion. |
| • | Core investment strategies4 represented 99% of the portfolio by fair value as of June 30, 2018, including 90% from direct originations and 9% from opportunistic investments. Broadly syndicated/other investments represented the remaining 1% of the portfolio by fair value. |
| • | Gross portfolio yield prior to leverage (based on amortized cost and excluding non-income producing assets)5 was 11.1%, compared to 10.9% as of March 31, 2018. |
| • | Total commitments to direct originations (including unfunded commitments) made during the second quarter of 2018 was $163.3 million in 11 companies, 5 of which were existing portfolio companies. |
| • | Approximately 0.2% of investments were on non-accrual based on fair value.6 |
| 2 |
Exhibit 99.1
Total Portfolio Activity
| Three Months Ended | ||||||||||||
| (dollar amounts in thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||
| Purchases | $ | 240,443 | $ | 115,990 | $ | 298,682 | ||||||
| Sales and redemptions | (350,253 | ) | (215,945 | ) | (310,569 | ) | ||||||
| Net portfolio activity | $ | (109,810 | ) | $ | (99,955 | ) | $ | (11,887 | ) | |||
| Portfolio Data | As of June 30, 2018 | As of December 31, 2017 | ||||||
| Total fair value of investments | $ | 3,626,901 | $ | 3,926,234 | ||||
| Number of Portfolio Companies | 109 | 100 | ||||||
| Average Annual EBITDA of Portfolio Companies | $ | 107,700 | $ | 85,700 | ||||
| Weighted
Average Purchase Price of Debt Investments (as a % of par) | 99.5 | % | 99.5 | % | ||||
% of Investments on Non-Accrual (based on fair value)6 | 0.2 | % | 0.2 | % | ||||
| Asset Class (based on fair value) | ||||||||
| Senior Secured Loans — First Lien | 67 | % | 64 | % | ||||
| Senior Secured Loans — Second Lien | 4 | % | 5 | % | ||||
| Senior Secured Bonds | 5 | % | 4 | % | ||||
| Subordinated Debt | 12 | % | 13 | % | ||||
| Collateralized Securities | 1 | % | 1 | % | ||||
| Equity/Other | 11 | % | 13 | % | ||||
| Portfolio Composition by Strategy (based on fair value)4 | ||||||||
| Direct Originations | 90 | % | 92 | % | ||||
| Opportunistic | 9 | % | 7 | % | ||||
| Broadly Syndicated/Other | 1 | % | 1 | % | ||||
| Interest Rate Type (based on fair value) | ||||||||
| % Variable Rate | 69.8 | % | 69.4 | % | ||||
| % Fixed Rate | 19.6 | % | 17.8 | % | ||||
| % Income Producing Equity/Other Investments | 2.2 | % | 2.3 | % | ||||
| % Non-Income Producing Equity/Other Investments | 8.4 | % | 10.5 | % | ||||
| Yields (based on amortized cost)5 | ||||||||
| Gross Portfolio Yield Prior to Leverage | 10.2 | % | 9.6 | % | ||||
| Gross Portfolio Yield Prior to Leverage — Excluding Non-Income Producing Assets | 11.1 | % | 10.5 | % | ||||
| 3 |
Exhibit 99.1
Direct Origination Activity
| Three Months Ended | ||||||||||||
| (dollar amounts in thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||
| Total
Commitments (including unfunded commitments) | $ | 163,261 | $ | 79,590 | $ | 197,084 | ||||||
| Exited Investments (including partial paydowns) | (288,451 | ) | (186,236 | ) | (218,280 | ) | ||||||
| Net Direct Originations | $ | (125,190 | ) | $ | (106,646 | ) | $ | (21,196 | ) | |||
| Direct Originations Portfolio Data | As of June 30, 2018 | As of December 31, 2017 | ||||||||||
| Total Fair Value of Direct Originations | $ | 3,277,882 | $ | 3,606,608 | ||||||||
| Number of Portfolio Companies | 72 | 75 | ||||||||||
| Average Annual EBITDA of Portfolio Companies | $ | 73,300 | $ | 68,600 | ||||||||
| Average
Leverage Through Tranche of Portfolio Companies — Excluding Equity/Other and Collateralized Securities | 5.6 | x | 4.9 | x | ||||||||
| % of Investments on Non-Accrual (based on fair value)6 | 0.2 | % | — | |||||||||
| Three Months Ended | ||||||||||||
| New
Direct Originations by Asset Class (including unfunded commitments) | June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||
| Senior Secured Loans — First Lien | 92 | % | 90 | % | 97 | % | ||||||
| Senior Secured Loans — Second Lien | — | 5 | % | — | ||||||||
| Senior Secured Bonds | — | — | 1 | % | ||||||||
| Subordinated Debt | — | 1 | % | — | ||||||||
| Collateralized Securities | — | — | — | |||||||||
| Equity/Other | 8 | % | 4 | % | 2 | % | ||||||
| Average New Direct Origination Commitment Amount | $ | 14,842 | $ | 13,265 | $ | 15,160 | ||||||
| Weighted Average Maturity for New Direct Originations | 7/16/2024 | 9/15/2023 | 12/17/2022 | |||||||||
| Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct Originations Funded during Period5 | 11.5 | % | 10.9 | % | 9.6 | % | ||||||
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct Originations Funded during Period — Excluding Non-Income Producing Assets5 | 11.5 | % | 10.9 | % | 9.7 | % | ||||||
| Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Exited during Period5 | 10.5 | % | 10.6 | % | 9.9 | % | ||||||
Leverage and Liquidity as of June 30, 2018
| • | Debt to equity ratio of 77%, based on $1.64 billion in total debt outstanding and stockholders’ equity of $2.13 billion. FSIC’s weighted average effective interest rate (including the effect of non-usage fees) was 4.64% |
| • | Cash and foreign currency of approximately $200.8 million and availability under its financing arrangements of $346.2 million, subject to borrowing base and other limitations |
| • | Twenty-two unfunded debt investments with aggregate unfunded commitments of $127.0 million and one unfunded equity commitment with an unfunded commitment of $112 thousand |
| 4 |
Exhibit 99.1
Conference Call Information
FSIC will host a conference call at 10:00 a.m. (Eastern Time) on Friday, August 10, 2018, to discuss its second quarter financial results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 472-8671 and using the conference ID 3745405 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed from the Investor Relations section of FSIC’s website at www.fsinvestmentcorp.com under Presentations and Reports.
A replay of the call will be available for a period of 30 days following the call by visiting the Investor Relations section of FSIC’s website at www.fsinvestmentcorp.com under Presentations and Reports.
Supplemental Information
An investor presentation of financial information will be made available prior to the call in the Investor Relations section of FSIC’s website at www.fsinvestmentcorp.com under Presentations and Reports.
About FS Investment Corporation
FS Investment Corporation (NYSE: FSIC) is a publicly traded business development company (“BDC”) focused on providing customized credit solutions to private middle market U.S. companies. FSIC seeks to invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market companies to achieve the best risk-adjusted returns for its investors. FSIC is advised by FS/KKR Advisor, LLC. For more information, please visit www.fsinvestmentcorp.com.
About FS/KKR Advisor, LLC
FS/KKR Advisor, LLC (“FS/KKR”) is a partnership between FS Investments and KKR Credit that serves as the investment adviser to six BDCs, including FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV, Corporate Capital Trust, Inc. and Corporate Capital Trust II.
FS/KKR seeks to leverage the size of its platform, differentiated origination capabilities and expertise in capital markets to maximize returns and preserve capital for investors.
FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth and focuses on setting industry standards for investor protection, education and transparency. FS Investments is headquartered in Philadelphia, PA with offices in New York, NY, Orlando, FL and Washington, DC. Visit www.fsinvestments.com to learn more.
KKR Credit is a subsidiary of KKR & Co. Inc., a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic manager partnerships that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.
Forward-Looking Statements and Important Disclosure Notice
This announcement may contain certain forward-looking statements, including statements with regard to future events or the future performance or operations of FSIC. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in FSIC’s operations or the economy generally due to terrorism or natural disasters, future changes in laws or regulations and conditions in FSIC’s operating area, and the price at which shares of FSIC’s common stock trade on the New York Stock Exchange. Some of these factors are enumerated in the filings FSIC makes with the SEC. FSIC undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| 5 |
Exhibit 99.1
The press release above contains summaries of certain financial and statistical information about FSIC. The information contained in this press release is summary information that is intended to be considered in the context of FSIC’s SEC filings and other public announcements that FSIC may make, by press release or otherwise, from time to time. FSIC undertakes no duty or obligation to update or revise the information contained in this press release. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSIC, or information about the market, as indicative of FSIC’s future results.
Other Information
The information in this press release is summary information only and should be read in conjunction with FSIC’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2018, which FSIC filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 9, 2018, as well as FSIC’s other reports filed with the SEC. A copy of FSIC’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2018 and FSIC’s other reports filed with the SEC can be found on FSIC’s website at www.fsinvestmentcorp.com and the SEC’s website at www.sec.gov.
Certain Information About Distributions
The determination of the tax attributes of FSIC’s distributions is made annually as of the end of its fiscal year based upon its taxable income and distributions paid, in each case, for the full year. Therefore, a determination as to the tax attributes of the distributions made on a quarterly basis may not be representative of the actual tax attributes for a full year. FSIC intends to update stockholders quarterly with an estimated percentage of its distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions to stockholders will be reported to stockholders annually on Form 1099-DIV.
The timing and amount of any future distributions on FSIC’s shares of common stock are subject to applicable legal restrictions and the sole discretion of its board of directors. There can be no assurance as to the amount or timing of any such future distributions, including the special distribution referenced herein.
FSIC may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of FSIC’s common stock, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets and dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies. FSIC has not established limits on the amount of funds it may use from available sources to make distributions. There can be no assurance that FSIC will be able to pay distributions at a specific rate or at all.
Contact Information:
Investor Relations Contact
Marc Yaklofsky
marc.yaklofsky@fsinvestments.com
FS Investments Media Team
Marc Yaklofsky
media@fsinvestments.com
| 6 |
Exhibit 99.1
| Income Statement | Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Investment income | ||||||||||||||||
| Interest income | $ | 77,458 | $ | 74,928 | $ | 152,727 | $ | 147,766 | ||||||||
| Paid-in-kind interest income | 8,704 | 7,588 | 17,152 | 14,469 | ||||||||||||
| Fee income | 2,993 | 9,546 | 5,446 | 29,076 | ||||||||||||
| Dividend income | — | — | 7,355 | — | ||||||||||||
| From non-controlled/affiliated investments: | ||||||||||||||||
| Interest income | 2,223 | 3,353 | 3,651 | 7,037 | ||||||||||||
| Paid-in-kind interest income | 726 | 699 | 3,873 | 1,305 | ||||||||||||
| Fee income | — | 2 | — | 31 | ||||||||||||
| From controlled/affiliated investments: | ||||||||||||||||
| Interest income | 1,404 | 939 | 2,524 | 2,441 | ||||||||||||
| Paid-in-kind interest income | 2,067 | 1,640 | 3,865 | 2,634 | ||||||||||||
| Total investment income | 95,575 | 98,695 | 196,593 | 204,759 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Management fees | 15,313 | 18,367 | 33,167 | 36,734 | ||||||||||||
| Subordinated income incentive fees | 10,906 | 11,617 | 22,905 | 24,764 | ||||||||||||
| Administrative services expenses | 742 | 742 | 1,476 | 1,476 | ||||||||||||
| Accounting and administrative fees | 249 | 255 | 503 | 520 | ||||||||||||
| Interest expense | 20,782 | 19,617 | 40,835 | 39,056 | ||||||||||||
| Directors' fees | 274 | 274 | 770 | 545 | ||||||||||||
| Other general and administrative expenses | 1,579 | 1,363 | 3,211 | 2,614 | ||||||||||||
| Total operating expenses | 49,845 | 52,235 | 102,867 | 105,709 | ||||||||||||
| Management fee waiver | (225 | ) | — | (2,776 | ) | — | ||||||||||
| Net expenses | 49,620 | 52,235 | 100,091 | 105,709 | ||||||||||||
| Net investment income | 45,955 | 46,460 | 96,502 | 99,050 | ||||||||||||
| Realized and unrealized gain/loss | ||||||||||||||||
| Net realized gain (loss) on investments: | ||||||||||||||||
| Non-controlled/unaffiliated investments | 40,736 | (14,147 | ) | 36,385 | (62,594 | ) | ||||||||||
| Non-controlled/affiliated investments | (10,083 | ) | — | (10,075 | ) | 305 | ||||||||||
| Controlled/affiliated investments | 12 | — | 12 | (52,879 | ) | |||||||||||
| Net realized gain (loss) on foreign currency | 36 | 61 | 97 | 184 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments: | ||||||||||||||||
| Non-controlled/unaffiliated investments | (81,473 | ) | (9,458 | ) | (98,974 | ) | 119,802 | |||||||||
| Non-controlled/affiliated investments | (21,073 | ) | (5,602 | ) | (26,603 | ) | (17,930 | ) | ||||||||
| Controlled/affiliated investments | (7,986 | ) | 4,132 | (17,693 | ) | (367 | ) | |||||||||
| Net change in unrealized appreciation (depreciation) on secured borrowing | — | — | — | (10 | ) | |||||||||||
| Net change in unrealized gain (loss) on foreign currency | 2,538 | (3,004 | ) | 1,936 | (3,726 | ) | ||||||||||
| Total net realized and unrealized gain (loss) | (77,293 | ) | (28,018 | ) | (114,915 | ) | (17,215 | ) | ||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (31,338 | ) | $ | 18,442 | $ | (18,413 | ) | $ | 81,835 | ||||||
| Per share information—basic and diluted | ||||||||||||||||
| Net increase (decrease) in net assets resulting from operations (Earnings per Share) | $ | (0.13 | ) | $ | 0.08 | $ | (0.08 | ) | $ | 0.33 | ||||||
| Weighted average shares outstanding | 242,801,446 | 245,107,405 | 244,249,274 | 244,832,713 | ||||||||||||
| 7 |
Exhibit 99.1
| Balance Sheet | June 30, 2018 | |||||||
| (Unaudited) | December 31, 2017 | |||||||
| Assets | ||||||||
| Investments, at fair value | ||||||||
| Non-controlled/unaffiliated investments (amortized cost—$3,359,024 and $3,532,517, respectively) | $ | 3,328,444 | $ | 3,600,911 | ||||
| Non-controlled/affiliated investments (amortized cost—$196,144 and $197,468, respectively) | 202,128 | 230,055 | ||||||
| Controlled/affiliated investments (amortized cost—$105,615 and $86,861, respectively) | 96,329 | 95,268 | ||||||
| Total investments, at fair value (amortized cost—$3,660,783 and $3,816,846, respectively) | 3,626,901 | 3,926,234 | ||||||
| Cash | 194,604 | 134,932 | ||||||
| Foreign currency, at fair value (cost—$6,305 and $3,685, respectively) | 6,174 | 3,810 | ||||||
| Receivable for investments sold and repaid | 19,552 | 3,477 | ||||||
| Income receivable | 32,239 | 30,668 | ||||||
| Deferred financing costs | 2,963 | 3,459 | ||||||
| Prepaid expenses and other assets | 525 | 1,695 | ||||||
| Total assets | $ | 3,882,958 | $ | 4,104,275 | ||||
| Liabilities | ||||||||
| Payable for investments purchased | $ | 21,841 | $ | 1,978 | ||||
| Credit facilities payable (net of deferred financing costs of $2,624 and $3,179, respectively) | 553,656 | 638,571 | ||||||
| Unsecured notes payable (net of deferred financing costs of $1,086 and $1,402, respectively) | 1,074,883 | 1,073,445 | ||||||
| Stockholder distributions payable | 46,029 | 46,704 | ||||||
| Management fees payable | 15,088 | 15,450 | ||||||
| Subordinated income incentive fees payable | 10,906 | 12,871 | ||||||
| Administrative services expense payable | 684 | 294 | ||||||
| Interest payable | 23,210 | 22,851 | ||||||
| Directors' fees payable | 261 | 276 | ||||||
| Other accrued expenses and liabilities | 1,622 | 7,112 | ||||||
| Total liabilities | 1,748,180 | 1,819,552 | ||||||
| Commitments and contingencies | — | — | ||||||
| Stockholders' equity | ||||||||
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding | — | — | ||||||
| Common stock, $0.001 par value, 450,000,000 shares authorized, 240,602,753 and 245,725,416 shares issued and outstanding, respectively | 241 | 246 | ||||||
| Capital in excess of par value | 2,233,692 | 2,272,591 | ||||||
| Accumulated undistributed net realized gain/loss on investments and gain/loss on foreign currency | (218,869 | ) | (245,288 | ) | ||||
| Accumulated undistributed (distributions in excess of) net investment income | 147,936 | 144,062 | ||||||
| Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency | (28,222 | ) | 113,112 | |||||
| Total stockholders' equity | 2,134,778 | 2,284,723 | ||||||
| Total liabilities and stockholders' equity | $ | 3,882,958 | $ | 4,104,275 | ||||
| Net asset value per share of common stock at period end | $ | 8.87 | $ | 9.30 | ||||
| 8 |
Exhibit 99.1
Non-GAAP Financial Measures
This press release contains certain financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). FSIC uses these non-GAAP financial measures internally in analyzing financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing FSIC’s financial results with other BDCs.
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with FSIC’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures has been provided in this press release, and investors are encouraged to review the reconciliation.
Reconciliation of Non-GAAP Financial Measures1
| Three Months Ended | ||||||||||||
| June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||
| GAAP net investment income per share | $ | 0.19 | $ | 0.21 | $ | 0.19 | ||||||
| Plus capital gains incentive fees per share | — | — | — | |||||||||
| Plus excise taxes per share | — | — | — | |||||||||
| Plus one-time expenses per share | — | — | — | |||||||||
| Adjusted net investment income per share2 | $ | 0.19 | $ | 0.21 | $ | 0.19 | ||||||
1) |
Per share data was derived by using the weighted average shares of FSIC’s common stock outstanding during the applicable period. Per share numbers may not sum due to rounding.
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| 2) | Adjusted net investment income is a non-GAAP financial measure. Adjusted net investment income is presented for all periods as GAAP net investment income excluding (i) the accrual for the capital gains incentive fee for realized and unrealized gains; (ii) excise taxes; and (iii) certain non-recurring operating expenses that are one-time in nature and are not representative of ongoing operating expenses incurred during FSIC’s normal course of business (referred to herein as one-time expenses). FSIC uses this non-GAAP financial measure internally in analyzing financial results and believes that the use of this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing its financial results with other business development companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. A reconciliation of GAAP net investment income to adjusted net investment income can be found above.
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| 3) | The per share data for distributions reflects the amount of distributions paid per share of our common stock to stockholders of record during each applicable period. |
| 4) | See FSIC’s quarterly report on Form 10-Q for the three months ended June 30, 2018 for a description of FSIC’s investment strategies.
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| 5) | Gross portfolio yield represents the expected annualized yield of FSIC’s investment portfolio based on the composition of the portfolio as of the applicable date. FSIC’s estimated gross portfolio yield may be higher than an investor’s yield on an investment in shares of FSIC’s common stock because it does not reflect sales commissions or charges that may be incurred in connection with the purchase or sale of such shares, or operating expenses that may be incurred by FSIC. FSIC’s estimated gross portfolio yield does not represent an actual investment return to stockholders, is subject to change and, in the future, may be greater or less than the rates set forth herein.
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6)
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Interest income is recorded on an accrual basis. See FSIC’s quarterly report on Form 10-Q for the three months ended June 30, 2018 for a description of FSIC’s revenue recognition policy.
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